Silence in Contractual Relations
Our Associate Hisham AlMansoor examines the legal effect of silence and implied intent under Bahraini law and its significance in shaping contractual relationships, enforcement rights, and remedies across key sectors.
Hisham Almansoor (halmansoor@raeesandco.com) – Associate
The expression of will or intention and the exchange of information in contracts is the fundamental basis on which contractual relationships may be formed, amended and renewed between parties. Nonetheless, Bahraini law also addresses instances where silence may often indirectly reflect an expression of the parties’ will, often creating misconceptions about the continuance of the legal relationship under contract, or misconceptions with consequences when a party is in breach of its obligations, or potentially triggering the voidance of contracts. This has interesting implications across different sectors, which we consider below.
Expression of Intent & Silence (Generally) under Bahraini Law
On the expression of the parties’ intent, Article 32 of the Bahraini Civil Code (Decree Law No. 19/2001), provides:
“An intention may be declared verbally, in writing, by signs in general use, and also by such conduct, as the case may be, which leaves no doubt as to its true meaning, unless otherwise required by the law in special circumstances to declare an intention in a certain manner. A declaration of intention may be implied when neither the law nor the parties require it to be expressed.” (Emphasis added)
Article 42 of the Civil Code further provides:
“(a) No statement is attributable to a person who remains silent. However, silence in circumstances requiring a statement shall be deemed an acceptance. (b) Silence in particular shall be deemed an acceptance if there exists a previous dealing between the parties to the contract and the contract relates to this same dealing, or where the offer is in the sole interest of the offeree.”
The law therefore recognizes, in some circumstances, that an intention may be implied where the law does not require an explicit expression of intent. It further provides that a party’s “statement” or position on a matter may be inferred in circumstances where action is required. We consider how this may be relevant in different contexts.
Employment & B2C Contracts
One misconception in relation to contracts of employment concerns the renewal of fixed-term employment contracts. The Labour Law (Law No. 36/2012) draws a distinction between contracts concluded for a definite duration and those for an indefinite duration. Pursuant to Article 96(a), contracts concluded for a definite duration expire upon the lapse of the contractually stipulated term. Nonetheless, provided there is no clause in the contract or an express agreement to renew the contract for the same period (in any event with a period of service below five years), if the employee continues service beyond the initial expiry date, by operation of law, the contract is converted into that of an indefinite term in accordance with Article 98(4).
In such circumstances, the renewal of the contract by operation of law typifies Articles 32 and 42 of the Civil Code, as the Labour Law does not require a formal expression of will and rather implies the parties’ intention to continue under the contract, however under an indefinite term.
The same concept is applicable to contracts between businesses and consumers (B2C), particularly those concluded online and/or on a subscription basis, where it expressly provides that a service is provided on a renewable term basis until such time as the consumer expressly cancels the arrangement, effectively terminating the contract in question.
Notices of Delay in Construction & Engineering Projects
Construction projects may encounter delays over the course of the contractor’s performance of the works. However, silence on part of the employer for such delays gives rise to serious ramifications affecting the employer’s prospects of claiming delay damages. For further insight into liquidated and delay damages and its limitations under Bahraini law, please visit our article titled “Liquidated Damages & Penalty Clauses in the Construction Industry”.
A party’s entitlement to claim delay damages, under Bahraini law, is conditional upon serving the defaulting party with a valid notice of delay. Article 220 of the Civil Code provides, “Subject always to any provision of the law or agreement to the contrary, compensation shall not be due unless the debtor has been formally notified”.
This entails that serving a defaulting party with a notice of delay is a crucial ‘legal’ act which places that party in a state of delay, without which the non-defaulting party is deemed to have “implicitly accepted” the delay up to the point of serving that notice. This may diminish an employer’s claim to delay damages from the contractor. For further insight into delay notices in this context, please visit our article titled “Delay Notices in the Construction Industry”.
Silence as Contractual Fraud & Voidance of Contracts
Parties may conclude contracts based on a transparent and mutual exchange of information. However, material omissions or misrepresentations by a party may have consequences on preserving and enforcing said contracts. A party who concluded a contract as a result of fraud by the counterparty may seek voidance of that contract, in accordance with Articles (89-91) of the Civil Code.
Misrepresentation, false information and intentional silence as to the information of decisive character for the other party or as to the accompanying circumstances and facts is also deemed fraud, where it is proved that the party under fraud would not have concluded the contract had he had knowledge thereof.
The Court of Cassation held under Challenge No. 1482 J.Y. 2019, regarding life insurance contracts, that a deliberate failure to disclose the full medical history of an insured individual constitutes an omission of a sufficient gravity to justify the contract’s voidance in light of severe medical issues and medical reports disclosed following the death of the insured, which were in existence at the time of concluding the life insurance policy.
Concluding remarks
Silence in contractual relations can be captured against different contexts, however they are all intrinsically linked to the ability to enforce such contracts and the rights or remedies available under the same. It may also be a representation of the principle of good faith enshrined under the Civil Code, where parties are required to perform the contract in accordance with its terms and consistent with the requirements of good faith and honorable dealing. A party’s good faith is brought under scrutiny when misrepresentations or omissions are made which affect the very decision to enter into a contract, and this may give rise to serious ramifications when disputes arise.
For more information, please contact us on info@raeesandco.com.